Another fine mess Labour's got into

AGAINST the advice of almost anyone who knows anything about transport, the Government is proceeding with its public-private plan for London Underground. The project involves giving responsibility for maintenance and track upgrades to the private sector while Transport for London, effectively a State body, will operate the trains.

The infrastructure companies will be subsidised by the Government but they will also raise money from bank loans and bonds. Officials claim the process is completely different from Railtrack but the City can see worrying similarities.

Yes, there will be several infrastructure companies but their viability from a financial standpoint still depends on the Government honouring its obligations. The City is expected to contribute more than £4bn to finance an improved Underground system and negotiations are taking place now. Less than a month has passed since Transport Secretary Stephen Byers pulled the plug on Railtrack and investors are still furious.

Tortuous discussions are taking place but clarity remains elusive and City institutions openly state they have lost faith in Government. They are now demanding higher rates of interest and more watertight contracts in return for funding the Tube.

The Treasury, which is alleged to be furious with Byers' handling of Railtrack, today suggested Government would take on more of the risk associated with PPP projects. In other words, taxpayers' contribution would increase.

Byers could not have picked a worse time to place Railtrack in administration. He has made the future of London Underground even more of a mess than it was already.

Capital crunch

LONDON First is sponsored by 300 of the capital's leading businesses and its mission is to improve and promote London. This has been particularly challenging since 11 September. Immediately after the terrorist attacks, confidence plummeted. Now there is a marked increase in uncertainty about the future. But London First points out there has been evidence of a slowdown in economic activity for some months. So 11 September has exacerbated an existing trend.

It has two key messages. The first is that a slowdown is just that. It is not a slump. Rather it means the buoyant growth of the past eight years is unlikely to be repeated in the next two.

Secondly, and perhaps more importantly, London First believes business people should keep their nerve. If companies succumb to despondency, they will suffer. The severity of the downturn depends on the resilience of those who work in the capital and their managers.

Plural perilp

GOING plural is a trendy way for successful middle-aged directors to downshift. Instead of doing one full-time executive job, pluralists take on several non-executive posts. But investors tend to dislike the strategy beyond a certain level. They think there is a risk directors will do none of the jobs thoroughly enough if they take on too many.

Allan Leighton, the former chief executive of Asda, left the supermarkets group after its takeover by Wal-Mart and went plural, taking on the chairmanship of Wilson Connolly, Bhs and lastminute.com. He is also deputy chairman of Leeds United and a board member of Scottish Power and BSkyB.

Today he became executive chairman of Wilson Connolly. The business has underperformed, the chief executive has resigned and a strategic review has been launched. Leighton is to be praised for taking swift action. But investors will want a new chief executive appointed soon. Otherwise they may begin to question if Leighton has enough time for his many commitments.

Frothy coffee

REMEMBER when the Yuppie came of age? Young urban professionals were a symptom of the Thatcher-driven 1980s and about the same time as they were strutting their stuff around the City, a stream of niche retailers sprang up catering for their needs and those of wannabe Yuppies.

Most of these boutiques have faded from memory because they failed to survive. Even the most prominent were not immune. Sock Shop went into administration and has since had a series of different owners. Knickerbox collapsed twice and even Tie Rack sold out to one of its suppliers after moving into loss.

If the big thing on the 1980s High Street was niche retailing, the big thing now is coffee bars. The dominant chains are US giant Starbucks and the British Costa, Coffee Republic and Caffe Nero. Despite some evidence of retrenchment, all four are bullish. They believe coffee has moved from being a luxury item to a daily necessity, a ritual that will not be discarded whatever the economic environment.

To outsiders, this sounds about as frothy as a raspberry mocha chip frappucino (which incidentally would set you back £3.35). Paying over the odds for a fancy coffee is all very well when cash is in abundance. It becomes rather less appealing when money is short. Niche retailers believed they could not fail to thrive. There is a distinct feeling of deja vu with today's coffee magnates.